South Gujarat Processors Association has submitted a petetion to the Chief Minister of Gujarat regarding 'LEVY OF GVAT ON PROCESSING OF FABRICS- REQUEST FOR RELIEF'.
The request went as follows:
In making the finished fabric, it has to undergo process of dying, bleaching and printing. This industry runs merely on job work basis wherein material like colour and chemicals are used. Under the Gujarat value added tax, 2003 (GVAT Act, 2003) its regarded as works contract hence VAT gets attracted. Prior to the Act, 2003 came into force in White Paper on State Level Value Added Tax by The Empowered Committee of State Finance Ministers (which is body Constituted by the Ministry of Finance, GOI, on the basis of resolution adopted in the conference of the Chief Ministers on November 16, 1991 New Delhi, January 17, 2005 which conceptualize the basic design of the Vat contains the solemn declaration that VAT would not be imposed on AED items including textiles. The reason was given of initial organization difficulties. Adhering to it GOG in the budgetary declaration made on 27.02.2006 affirmed that items of textile shall be placed exempted from VAT.
Despite the facts anomaly has still remains in processing industry. This association referred the query to the EC, New Delhi. On 05.07.2006 the reply received is affirmative, it clearly states that the “The Empowered Committee of State Finance Ministers recommended in its meeting in April 2005 that processing of textile would not be assessed for VAT so long as textiles are covered under AED”. We submit that on the same line no other State has levied VAT at processing stage. Hence we urge that commitment be executed.
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